Suicide, Scams, Scandal Trap a Nation in Poverty: William Pesek

Aug. 15 (Bloomberg) -- The Philippines can be a
scandalmonger’s paradise. At this very moment, editors are
pressed to decide which controversy goes on the front page: the
suicide story, the car scam, Chopper-gate or the asylum follies.

Each of them sells newspapers and each is linked to a
central figure: Gloria Arroyo, who until June 2010 was president.
Arroyo’s successor, Benigno Aquino, is pursuing her on
corruption allegations and the campaign’s success will say much
about whether the Philippines moves ahead or becomes an even-less-significant draw for investors than it already is.

The country’s ranking as Asia’s 13th-biggest economy says
it all. In the 1960s, the resource-rich, politically stable
Philippines was seen as the coming Japan of Southeast Asia.
Today, its economy is smaller than Pakistan’s and a quarter of
its 102 million people live on less than $1.25 a day. What
happened? Well, Ferdinand Marcos happened. The dictator did
quite a job of wrecking the economy from 1966 to 1986, and it’s
still recovering.

In 1983, Aquino’s father, leader of the opposition, was
assassinated. In 1986, Aquino’s mother, Corazon Aquino, became
president after Marcos was deposed. She tried to restore some
semblance of efficiency, transparency and accountability in a
revived democracy.

Rampant Corruption

It proved too much for one leader. Corruption remained
rampant and the hopes and expectations of the 1960s became the
stuff of nostalgia. Although growth now is a healthy 4.9 percent,
politicians and businesspeople hoard most of the gains. The
country ranks 134th out of 178 countries in Transparency
International’s corruption perceptions index, tied with Nigeria
and Bangladesh.

Filipinos deserve better. Their nation is welcoming,
vibrant, fascinating and boasts some of the most beautiful
landscapes anywhere. Thanks to corruption, it is an afterthought
in terms of foreign investment and tourism. Nothing demonstrates
the backwardness of Philippine infrastructure like its
dilapidated airports. A tropical rainstorm in Manila can let
loose a flood that’s the stuff of horror movies.

The good news is that Aquino is homing in on the problem.
The three major debt-rating companies have raised the country’s
sovereign grade within the past year. While the Philippines
still bears a “junk” rating, it’s getting credit for improving
tax collection and tracking down cheats, helping to curb budget
deficits. Now, Aquino is redoubling an anti-corruption effort
that, at least rhetorically, is cheering investors.

Political Culture

Arroyo is an obvious place to start because her story is so
emblematic of what ails the political culture. In 1998, she was
elected vice president under Joseph Estrada, a former movie
actor who was ousted in 2001 amid corruption allegations. Arroyo
that year assumed the presidency, but was later accused of dodgy
dealings, including vote rigging in the 2004 election.
Suspicions also circled around her husband, Jose Miguel Arroyo,
and her son, a congressman.

Talk about fertile ground for investigations. Aquino’s team
is busily auditing many big-money deals approved during the
Arroyo years. A halt was placed on one plan to borrow about $440
million to remove silt from Laguna Lake that would have re-accumulated before the debt could be paid. A state-run gaming
agency spent $23 million on coffee during Arroyo’s rule. Must
have been quite a brew.

That gets us back to the four scandals mentioned earlier.
The first involves a probe Aquino ordered into the suicide
earlier this month of a lawyer associated with the Development
Bank of the Philippines. Benjamin Pinpin reportedly was a key
witness in investigations into bank transactions during the
Arroyo years.

Scandals Galore

The second refers to the Japanese sport-utility vehicles
that Arroyo allegedly gave to the Catholic Church in about 2006
when she faced impeachment. Around that time, Arroyo tried to
curry favor with the powerful church by opposing giving women
access to contraception. Overpopulation undermines the economy,
yet the church blocks all discussion of family planning.

Chopper-gate is an investigation into whether Arroyo’s
husband had owned helicopters that were later sold to the police.
The question is whether they were listed on President Arroyo’s
sworn statements of family assets, net worth and liabilities.

The fourth concerns press reports that Arroyo is seeking
political asylum overseas as criminal accusations multiply.
Arroyo’s lawyers and advisers have had to come out and deny that
she may flee to Portugal.

Aquino must not pull any punches in his corruption battle.
That has happened too many times in the Philippines. Its people
deserve a thorough and public accounting of why their living
standards haven’t improved. There needs to be a serious
reconsideration of a political culture that serves itself, not
the tens of millions toiling in poverty.

The only way the Philippines will reach its true potential
is to get the spoils of economic growth out of the pockets of
politicians to those who most need it -- and earn it. An end to
the scandals and corruptions might help, too.

(William Pesek is a Bloomberg View columnist. The opinions
expressed are his own.)